High court to rule on who pays for care of accident victims

The high court will take further steps this week to clarify the law on big insurance claims where social services departments - and through them the taxpayer - are shouldering much of the financial burden for care after serious accidents.

The hearing in London, starting tomorrow, will consider a case where payments running into millions are at issue in a damages award to a young man injured after the car in which he was a passenger hit a tree. Lawyers and local authorities are concerned that recent judgments mean council care payments to victims - required by law - are deducted by insurance companies from claim settlements on the grounds that the bill would otherwise be paid twice.

In the 2004 hearing of Sowden v Lodge, insurers argued successfully that failing to discount for social services care would have taken a damages payment over the figure agreed with an accident claimant. The appeal court's ruling has been criticised as leaving social services departments to "subsidise" insurance companies in such cases.

Tomorrow's hearing, before Mr Justice Simon, is expected to last up to 10 days. It involves Paul White, 26, from Woodbridge, Suffolk, who suffered severe head injuries, broken bones and lacerations after the road accident in May 2000 near Ipswich. He was transferred from the local hospital to Addenbrooke's in Cambridge and then to the Royal hospital for neuro-disability in Putney, south-west London, because of the scale of his injuries. When he was discharged 10 months later, doctors said he was likely to remain in a "minimally conscious state". But an extensive care package organised by Suffolk county council and local health authorities has transformed his condition. Mr White's family say the care has restored him to a happy and purposeful life, in spite of continuing medical problems.

"It is accepted that Paul needs 24-hours-a-day care for the rest of his life and that he should be empowered to live in the community," said Mr White's solicitor, Simon Davis, a personal injury specialist from Kester Cunningham John of Thetford, Norfolk. "This is also a case in which the local authority has committed itself to providing direct payments to fund part of the care regime."

But the source of the payments has emerged as an obstacle in the run-up to a final settlement. Mr White is suing the car's driver, Hugh Eastman, and there have been months of negotiation over the value of the claim.

Mr Davis said: "It is agreed that Paul will be compensated in full but there is disagreement on detail. In particular, the court may have to consider whether state funds should be used to pay for the care of someone like him, who can claim in full against the person who injured him."

The question has been sharpened by legislation which has increased the obligations of social services departments, at the same time as financial restrictions have put pressure on budgets. An additional factor is the possibility that local councils may reassess a victim's need if a full insurance payment is made. "There is room for manoeuvre, but the wider issue is an important one where clarification would be welcome," said Mr Davis.